The Money Making Methods of Twitter

Twitter is free to use and has no adverts - so how does the company actually make any money?

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Twitter, the popular microblogging service, is something of an enigma for many. Some people just don’t see the point of it; others don’t understand what the fuss is about. You’ll also find people who reckon it’s full of people telling the world what they had for breakfast; sadly, it isn’t uncommon to stumble across Twitterers who genuinely waste everyone’s time doing exactly that, and wondering why they have no followers.

There is also the massive section of users who understand and use Twitter, but don’t actually appreciate its full, unique ability to really reach out and find people with shared interests.

If you imagine all of the above as circles in a Venn diagram, the time has come to create a large circle that bisects each of them, representing the people who just don’t know how Twitter generates income.

It’s an interesting point, don’t you think? There are no adverts on the main Twitter site (although some mobile apps are ad-supported, these are third-party and have nothing to do with Twitter) and there is no subscription. Instead, there are just millions of users with a myriad of interests. Many users access their Twitter accounts to find out more about the subjects they like and commune with others with the same interests.

That’s a lot of people, talking about a lot of stuff.

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What Twitter Knows About You

Whether you have an account or not, Twitter knows information about you – something that it can leverage to its advantage.

For instance, you might have a Twitter account and use it to follow news from a popular TV show. You’ve probably also given Twitter your name and location (at least the country you’re in), information that will prove indirectly useful.

Alternatively, you might be a regular Tweeter with plenty of followers. Your thoughts – compressed into 140 characters – could be hugely popular, particularly if the subject you are talking about is one with its own large following.

Even if you don’t have a Twitter account, the people running the company still know something about you – that you use the web, and probably search the web with Google, Yahoo! or Bing.

All of this information is extremely important to Twitter, which has a massive archive of old Tweets.

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The Obvious Income Stream – Search Engines

As you might have guessed from reading the previous section, Twitter has the ability to make quite a bit of money from search engines, namely Google, Yahoo! and Bing. While the figures are unknown (possibly as much as $25 million), all three services have offered live search results from Twitter, although as of July 2011 this is no longer provided by Google who seem to be focusing on their own Google+ service.

Bing provides a “social search” service via Bing.com/social, but as yet neither Bing nor Yahoo! has offered Twitter search results blended into the main search in the way that Google previously did via the Twitter “firehose”, a single feed of everything new in Twitter.

Of course, Twitter has its own search tool, but this is limited to the last few days’ worth of tweets. One service continues to offer access to the Twitter archive as well as the firehose, and that is Topsy.com.

While Google and Twitter appear to have fallen out, there remain various options for Tweets to generate income for the social blogging service.

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Twitter’s Corporate Bonuses

As Twitter has grown, the way in which it is used has evolved, with more and more businesses finding their way onto the service and setting up their own feeds. For instance, a broadcaster might reveal details of a change of schedule via Twitter, while a record company might announce a new album release.

There are three main ways in which companies can promote themselves on Twitter, each of which generates income for the service.

If a large company is currently running a special promotion, they might pay for promoted Tweets, and these will appear in the results of any search performed on Twitter.com.

Similarly, promoted trends can also generate cash for Twitter; these appear on the main Twitter page along with the genuine trending topics.

Furthermore, organizations can identify key followers and promote themselves to these people for a small fee (50 cents to $5 per follow), but this tactic is usually limited to targeting Twitter users with plenty of followers.

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Tweeting Technology

There is yet another way in which Twitter currently generates income without plastering banners all over their website (“traditional web banner advertising isn't interesting to us,” Twitter executives have recently been quoted as saying) and that is via technology, specifically mobile phones.

More and more users are Tweeting from their mobile apps (as opposed to sending a text message, one of the original methods of sending mobile Tweets) but as social networking becomes more and more popular, so Twitter becomes an increasingly vital aspect of mobile phones.

A key example of this is with Microsoft’s Windows Phone 7, which will soon feature a Twitter app integrated into the contacts management tool; this allows the user to see which contacts are on Twitter and their recent updates. Previously, Twitter teamed up with Peek to offer a mobile Tweeting device for anyone who doesn’t have a mobile phone to use instead – however thanks to a change in which third-party apps authenticate with Twitter, the TwitterPeek is now useless.

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A User Centric Experience

It is refreshing that in this day and age of 24 hour TV and advertising, spam emails and affiliate marketing that Twitter is refusing to shower its users with banners, Facebook-style user-targeted advertising or even email adverts to generate income for the service.

Twitter’s executives clearly recognize that endless adverts would damage the user experience, something that is often akin to having a chat with friends.

Let’s hope that they are able to find further unobtrusive means of funding the service!